Company Analysis - Miniconf by rachelleshantal

COMPANY ANALYSIS

Rachelle de Jong / M2B / 2017-18

TABLE OF CONTENT

EXECUTIVE SUMMARY

3-4

INTRODUCTION

5-6

COMPANY BACKGROUND

7-8

RESEARCH FOCUS POINT

9-10

THE MCKINSEY 7S MODEL - Shared Values - Structure - Style - Staff - Skills - Systems - Strategy - 7s Connection

11 12 13 14 15 16-17 18-20 21-22 23-24

MARKETING CHANNELS

25-26

FINANCIAL ANALYSIS

27-29

SWOT

31-32

CONCLUSION

32-34

APPENDIX - Sources - Balance Sheet & Income Statement - Stystems (calculations) - Marketing Channels - Financial Analysis (calculations)

36 37-40 41-42 43-44 45-47 48-50

EXECUTIVE SUMMARY

Miniconf, one of the biggest players within the Italian childrenswear industry, has reached extent and visibility on an international level and kept its own family reality and stable relationship with territory. The company is leader within its segment through its three brands Sarabanda, iDO and Dodipetto and focusses on being the centre for creating design, having a multi-channel distribution, paying attention to the latest technologies and advanced logistics. (PagineGialle.it, 2018) To get more knowledge of the company, as a whole, it is important to understand its strategy and see the links between both the internal and external analyses. These factors are key elements in order to give the company strategic advice for its future strategy; to expand to the Dutch childrenswear market. (Magni, 2018) To identify and evaluate what is going on inside the company, the first step was to address the specific focus point ‘Consumer Evolution’ and relate this to the strategy of the company. Thereafter the ‘McKinsey 7s Model’ was applied for internal research. The final step was to analyse its marketing channels and financial management. After combining all of this research, the SWOT analyse of the company was assessed. The future development of the company could be in danger with its poor brand visibility (online and offline), miscommunication between the internal departments, bad communication towards the consumers and difficulties selling the inventory and monitoring the cash flow. By having an excellent organizational structure, high productivity, loyal staff and strong relationships, Miniconf could gain advantage over others. (de Jong et al., 2018) Due to the rapid growth of urbanization and economic recovery, the company can generate growth (8%) within the childrenswear market in the Netherlands. Also the rise of sustainability could put the company in advantage. On the other hand, fast fashion will rise even more towards 2022 and consumers will have all the power. This could cause difficulties for the company, in terms of managing its online

INTRODUCTION

Miniconf, one of the most biggest players within the Italian childrenswear industry, is leader within its segment through its three brands; Sarabanda, iDO and Dodipetto. The company was founded by Giovanni Basagni in 1973. It has reached extent and visibility on an international level and kept its own family reality and stable relationship with territory. (PagineGialle.it, 2018) This report will provide more insights into the Miniconf company. The Findings will be expressed through the use of text, imagery and its business model including the 7s of McKinsey, marketing channels and financial management. The results are summarized into a SWOT analysis, as an outcome of all the research. All information used in this report was founded online or through interviews with different departments. Most of the limitations were about the in-depth information that was available, because the company is not very transparent and do not give a lot of insights within its business model.

Miniconf

BACKGROUND Miniconf, one of the most biggest players within the Italian childrenswear industry, has reached extent and visibility on an international level and kept its own family reality and stable relationship with territory. (PagineGialle.it, 2018) History Giovanni Basagni, with his vision, established Miniconf, in 1973.The business began in Ortiganano, the heart of the Casentino Valley (east side of Tuscany). This area is a dream itself. Within the mountains, hidden between trees, cliffs and the valley where the river flows. (Conti, 2018) This environment combines these contrasting aspects in such a perfect way, which drives the company since the beginning. It can be seen as one of its crucial elements. The company operates in Tuscany and most of the employees have a long-lasting background within this area. (Conti, 2018) Currently, Miniconf is leader within its segment through its three brands Sarabanda, iDO and Dodipetto and seasonally presents a collection of about 2.000 items. (ELITE Company interview, 2018) The elements on which Miniconf focussed the past years is being the centre for creating design, having a multi-channel distribution, attention for the latest technologies and advanced logistic. (Conti, 2018)

RESEARCH FOCUS POINT

CONSUMER EVOLUTION Miniconfâ&#x20AC;&#x2122;s success is -among other things- based on a unique ability to listen to the market and the consumer. When looking at the changes of customer behaviour within the childrenswear market, the last couple of years, Miniconf noticed some major differences: > Before, it used to be totally focused on the adult segment. This was more innovative and got changed quickly. And then, childrenswear would follow. (Bendinelli, 2018) > But now, because fast fashion is growing so fast, this is also being adapted within the childrenswear market. To keep and attract customers, brands need to make a shift of reacting quickly on the market. If not, the customers will go to brands like Zara, H&M, Primark, etc. (Bendinelli, 2018) > The millennials (mothers) do not engage with brands anymore. People are less brand loyal. (Bendinelli, 2018) For Miniconf, those big changes are not easy because its processes are more product oriented (supply) instead of market driven (demand). The supply chain is long and not really flexible. (Bendinelli, 2018) When looking at how the company reacts to this changing behaviour of customers, the company focuses on two main aspects: 1. Being much more targeted within the overall communication. It focusses on the customers who reflect with the brand(s) by their interests. (Bendinelli, 2018) 2. Creating content which is relevant for the mothers, in-line with the brands Sarabanda, iDO and Dodipetto. (Bendinelli, 2018) To measure how the customer feels about the brand, the company does a broad market research, to see how customers perceive its brands. Since a short period of time it keeps on monitoring the online use of the brands (google the analytics). When the company used e-commerce for the first time, there was more traffic on the website and there was a peak in sales. (Bendinelli, 2018) Sub conclusion Miniconf is quite far in this process, but needs to find out better how to apply the founded information. When looking at the future changes, this does not always fit.

Strengths: Good in-depth research. Weaknesses: Hard to adjust its processes.

THE McKINSEY 7s MODEL

SHARED VALUES For Miniconf, values are important for its overall culture. They define its identity and establish a competing benefit in terms of sustainability. The brand always wants to communicate and share this with its partners, clients and suppliers. The values are focussed on long-term and good relationships. (Miniconfapp.com, 2018) Transparency and Loyalty Miniconf focusses on strong relationships, build on honesty and trust.

(Figure 1) Transparency and Loyalty

Respect Respect, for Miniconf, is based on others and itself. Next to this, having respect for its working environment as well as the safety and well-being of its consumers and employees are essential aspects. Sense of belonging The feeling of belonging to something arises through the way the company is managed and the involvement and knowhow of everyone. (Miniconfapp.com, 2018)

SHARED VALUES Respect

Sense of Belonging

The companyâ&#x20AC;&#x2122;s style (p.14) gives a good indication about its team culture. Sub conclusion What the company stands for is clear, but it does not always radiate in its actions. Next to that, it says that it shares and transmit the values, but not with its customers (who are important to the brand), while transparency and loyalty are important values. The values are strong, but some are not applied properly.

Strengths: Values communicated and shared with partners, suppliers and clients. Weaknesses: Companies culture not shared with consumers, no action.

STRUCTURE From the live interviews and available data can be concluded that Miniconf has a functional structure. All employees are grouped according a specialized set of roles/tasks. (Hera, 2018) All external communication is done by the CEO himself. All departments have its own manager. Those managers are responsible for their own department and communicate certain decisions (made and applied) directly to the president and CEO. (Magni, 2018) Due to specialization, employees perform tasks more quickly and efficient, which makes the productivity very high. However, due to bureaucracy, there could be rigid communication between departments. This could lead to a slowdown in the decision making processes. (Hera, 2018) When looking at effectiveness, the company cannot quickly respond to changes but can operate excellent in stable environments. (Hera, 2018) The companyâ&#x20AC;&#x2122;s management style (p.14) gives a good indication about its span of control and communication between management layers. (Figure 2) CEO

President

Design (Manager)

Merchandise (Manager)

Production (Manager)

Marketing (Manager)

Sales (Manager)

Finance (Manager)

Employee

Strengths: High productivity, people with similar knowledge/skills are grouped together. Weaknesses: Rigid communication between departments, slowdown in decision making.

STYLE Miniconf is a private company, which means that it is held under private ownership. The company is a family ownership. This is one of the reasons why the company stays private. (Business Culture, 2018) The companyâ&#x20AC;&#x2122;s shared values (p.12) give a good indication about its norms and values. The company has a management business model, but with a family flavour. By looking at different aspects such as; outside communication, hierarchy, interviews with employees and then connecting this to the Italian business culture, there can be concluded that respect for authority is very important. Italians are not very punctual and it is important to build close relationships. (etiquette, Italy and Italy, 2018) When looking at Miniconf, all external communication is done by the CEO himself. This means that he makes the final decisions. All department managers are Italian and report directly to the president and the CEO. (Magni, 2018) This means that the management style is a combination between autocratic and democratic. The managers decide, with cooperation of lower levels. Being formal to managers is very important. The structure is organized in a strict an clear way, which leads to good performances and satisfaction. The leader behaviour is production oriented, which emphasises task accomplishment. (Smit, 2018) Within the company you can see the family feeling/behaviour. Everyone works very close to each other. There are meetings with all management teams, once per month. All departments share their strategies four times a year (begin and end of every season). Collaboration is an important aspect for Miniconf. All employees and managers try to cooperate as much as possible, but of course with respect for authority. (Magni, 2018) Sub conclusion Within the way of working and behaving, the company operates: bureaucracy. There are different offices, coordinated at management level. This works very well within its business model because there is respect for authority but collaboration between employees and different management levels is still there.

Strengths: A lot of meetings and collaboration between the different levels. Weaknesses: Too much of an autocratic style can also cause dissatisfaction.

STAFF Miniconfâ&#x20AC;&#x2122;s work culture is dynamic. Being respectful to others is very important. The old-school philosophy, respect for others and the excellent work environment, are reasons people want to work for the company. (Magni, 2018) The requirements for employees very much depends on the position. But on overall, the company requires them to be structured, to have a specific knowledge of the operation and be sensitive to soft skill. (Magni, 2018) The companyâ&#x20AC;&#x2122;s structure (p.13) gives a good indication about the different positions/ specialisations represented in the team.

(Figure 3)

Employees:

Managers:

> 210 + 110 seasonal jobs > Most of them stay for a long time > 24% at the HQ speaks English

100% = Italian

Women/Men: 80/20

(Figure 4) 5% Remaining

Living in a radius of 8 km

90%

The company tries to find a good balance (for employees) between work and spare time. There are for instance 36 people with requested part time schedules and 41 specialized schedules, all with the aim of respecting the needs of the individuals and/or of the different company segments. The levels of employee trainings and educations are higher compared to the average sector. (Miniconfapp.com, 2018) The company invests a lot in Human Capital, for instance assistance, internal/external training and outside study days. (Magni, 2018) To optimize presentation and get/keep employees motivated, Miniconf offers a bonus system. If certain goals are reached, the staff can be considered for a bonus. (Magni, 2018). Sub conclusion When looking into the workflow of different departments, it seems that the atmosphere within different departments is very relaxed. People walk around with a straight face and are also very busy. (Buyers office Miniconf._PITTI (1).MOV, 2018) Because the company provides trainings regularly, this could be very motivating and helpful for everyone within the company (also because some are free of choice).

Strengths: Loyal employees, several trainings, bonus system. Weaknesses: High workload.

SKILLS Miniconf differs itself from its competitors by the disposition towards innovation and extension towards the future. Its success derived from its capability to listen and anticipate to the market and its customers. Because the company achieves its most desired goals, sometimes even before the consumer notices, Miniconf is often already creating a specific need. In this way the company is are already looking into the future. (Conti, 2018) To find its competitive strategy, there is a comparison done between Miniconf and its biggest competitors. The companyâ&#x20AC;&#x2122;s skills and competences are focussed on garments which are in conformity with the International Safety Standards. The garments will have different Quality Tests, with internal and external Third Party inspections. Stress tests also ensure the durability of all apparel. Because there is a lot of attention given to the details, it makes sure that the safety of the children is not in danger. (Miniconfapp.com, 2018) When comparing Miniconf to its competitors, it provides its goods for a reasonable but higher price (by looking at what it offers in combination with its identity and values). The production is separated according to the different items and prices. It intensively watches the costs of production and make long-term contracts with the suppliers or buying agents. affordable (Patelli, 2018) The companyâ&#x20AC;&#x2122;s delivery process, compared to its biggest competitors, is taking very long. Most of them can provide goods within one or two days, while Miniconfâ&#x20AC;&#x2122;s delivery takes five. Without even having an express service. (Sarabanda.it, 2018) Prestige Price

Luxury Market

(Figure 5)

Mass Market

All mentioned factors will lead Miniconf to the Operational Excellence strategy, where high quality and a reasonable price are leading. But by looking at being error free and having a quick delivery, the company fails. This means that Miniconf has parts of this competitive strategy, but do not has the capability to reach all aspects.

Affordable

Sub conclusion The USP’s of the company are not really that future proof. When looking at the company and its collection, future proof elements are not seen that much. This tells a lot about how the company perceives itself. It does not have a realistic view on its own identity. The safety and quality parts are very much seen within the quality and design –including detailing– of the collections of all three brands.

Strengths: Wide size ranges, reasonable price. Weaknesses: Lack of communication to the consumers, slow delivery.

SYSTEMS Miniconf provides childrenswear for boys and girls, from new-borns up to 16 years old. From casual to more trendy items, suitable for all occasions. All stand out for the comfort and excellent value for money. Most of the company’s goods are manufactured externally, with a priority on sustainability and a good quality. (Magni, 2018) The biggest amount of Miniconf’s goods are manufactured in foreign countries, divided by specific countries. Bangladesh: big orders/simple items and China/Turkey: more specialized items. (Patelli, 2018) The company chooses its suppliers strictly, by first sending them through the three quality stages check. (Magni, 2018) All customer orders are located in the logistic warehouses, which are divided according to different shipment zones. Customers can return the ordered goods for free. (Miniconfapp.com, 2018) When having the first purchase, Miniconf provides a 15% discount. The stores invite its customers to become a member, in order to take advantage of the web purchase service. (Presentazione EC per export, 2018) Miniconf’s strategic tool is to address the parents within the marketing campaigns and uses e-mail marketing and different social media platforms to attract and reach customers. (Bendinelli, 2018) (Figure 6) > 200 containers per season/400 per year. > 7,500,000 8,000,000 packages per year. > 30 suppliers (80% China, 7% Tunisia, 5% Bangladesh, 4% Italy & 4% Pakistan) > Internal Quality Control, Chemical & Safety check (third party). > Lead time: 60-90 days.

> Managed at headquarter. > All garments are thought by a team of designers rooted in Tuscany, Italy.

PLANNING

SOURCING

> Choose suppliers: the three quality stages check. > Source in Italy, not much in Europe.

> Ferrantina Logistics Warehouses (insourcing) & External ones (out-sourcing) are connected with the head office in Ortignano. > All Client Boxes are located in the respective Logistics Warehouses. > The Warehouses are divided according to Shipment Zones.

PRODUCTION

TRANSPORT

> Every day: maximum capacity of 5-6 courier/voyages for 120-150 pallets. = 10.000-12.000 packages.

DISTRIBUTION

SALES & MARKETING

> Free returns, within 21 days. > 15% discount (on 1st purchase). > Take advantage of the web-purchase service, when becoming member in-store. -The “contact shop” (check availability in-store).

To find Miniconf’s supply chain strategy, there are several points examined. At first, the company already creates a specific need, before the consumer even notices. (Skills, p.16) This means that the company pushes something into the market (forecast based). The company intensively watches costs. Being financially healthy is something it aims for, since it wants to increase costs and make more profit. In order to shorten the lead-time, the company tries to anticipate in terms of fabrics. On the other hand, Miniconf pays a lot of time and attention to the quality checks and puts a lot of effort and money into these processes. (Patelli, 2018) Most of the production is being manufactured quite far away (Fig. 6, p.18). When selecting suppliers, it is based on costs, quality and size. All mentioned factors will lead Miniconf to the Lean strategy, where cutting costs and pushing something into the market play a big role. But by looking at the aspects of no waste in the broadest sense and high volumes, the company does not fit within this strategy. This means that Miniconf has parts of the Lean strategy but also the Agile strategy, especially when looking at its low volumes. Financial analysis To analyse how Miniconf’s supply chain influences its financial performance, there are two important indicators to look at: Return On Capital Employed (ROCE) and Inventory Turnover. Return On Capital Employed (ROCE) The company is able to return €0,06 cent back on €1,00 investment. It would be better for the company to get this higher, because the more money it will get returned. It is not very efficient with its working capital by now, but comparing this to 2015 there is an increase of 4,3%. When looking at the change in profit and capital employment, there can be seen that the changes come from the profit side. If then looked at all different aspects which could influence this, there can be concluded while the company purchased less and had less costs, the sales decreased by 5.000.000 euro’s. Benchmark: By comparing this to OVS (Ovscorporate.it, 2018) and H&M (About.hm.com, 2018), their outcomes are extremely higher. Miniconf’s ROCE is lower, but it’s logical that their outcomes are a lot higher because of their market shares. Inventory Turnover The company is able to sell its full stock 2,0 times in 2016, which is a good outcome for this company. Comparing this to 2015, this is a small but positive change because the inventory sales improved.

Benchmark: By comparing this to OVS (Ovscorporate.it, 2018) and especially to H&M (About.hm.com, 2018), Miniconf did a really good job, while its competitors had really hard times at selling the inventory. DSI/DIO The companyâ&#x20AC;&#x2122;s financial analysis (p.29) gives a good indication about its DSI/DIO.

Strengths: Hard to react fast on customer demands. Weaknesses: Low ROCE, lean strategy is not complete.

STRATEGY Miniconf’s mission: to make each brands’ identity stronger and more unique. By offering that, it could also satisfy the ‘small consumers’. The company wants to provide children with comfortable, safe, tempting, top-level clothes. And at the same time to have the maximum attention for its consumers, environment and collaborators. The company’s vision: “Children inspire us, our values guide us”. (Miniconfapp.com, 2018) When looking at Miniconf, the company indicates that it will be focussing on the following objectives, for the upcoming three years: Increasing brand awareness By now, Sarabanda and iDO are not sold online, which means that the company is missing out on a great opportunity of increasing sales via the internet, +18% 2015-2016 (Magni, 2018) and at the same time of creating more brand awareness. To improve, its new project will be all about e-commerce, shared between company and trade. This will lead to: achieve contacts, an increase of shop visits and sales. (Presentazione EC per export, 2018) Increasing profitability To make its total business model and whole production process more quick and operative, the company will make more investments on these aspects. (Miniconfapp.com, 2018) Being faster and more efficient will allow the company to have a decrease in costs, more grip on the information flows and processes, a decline of inventory and better collaboration between departments. (Magni, 2018) Visibility of the stores In order to enlarge the perceptibility of the stores (and also increase profitability), the company will rise a new retail formula. This includes advice from its Expt. Dept, architectural research and total store lay-out, trainings for the sales team, support of the VM team (ideas/displays/window dressing/materials), software programs for retail analysis, a seasonal media plan and creative support from the Advertising Department. The company will also acquihire contacts with special offers: a shop bonus (15% discount on the 1st purchase), “contact shop” (check the availability of the item in-store), sharing project (compare prices within the shop), affiliation to the store (become member, to take advantage of the web purchase service). (Sarabanda_presentation_Feb_ 2016_ret, 2018) When combining these three corporate strategies, the main strategy is: Internationalization. Miniconf wants to double the revenues within the next five years from 15% to 30-35% (Magni, 2018), by increasing brand awareness, profitability and the visibility of the stores.

The functional strategies of Miniconf, to validate its corporate strategies: Style/design/merchandise For this department, increasing profitability means to improve collections, in terms of quantities sold. (Patelli, 2018) Branding/marketing/communication For this department, increasing profitability means to manage the perception of the brand; to keep them separate. To reach this goal, the company needs to have a more adaptive and flexible approach. It needs to collect data and keep monitoring about how the customers perceive and understand its brands itself. (Bendinelli, 2018) Sub conclusion > Increasing brand awareness With its new e-commerce plan, Miniconf started offering more visibility online. It focussed on multiple things such as being the first on google search, e-mail marketing and Facebook and Instagram tools/actions, which provided them a lot of fans/followers. > Increasing profitability To reach this goal, Miniconf needs to be more fast and efficient in the broadest sense. By analysing and comparing the company to its biggest competitors, this is not seen yet. In terms of production and delivery the company still needs to work on this. > Visibility of the stores Miniconf offers a lot of actions/tools to increase the store visibility. The shops offer affiliation to the store (p.21), which makes it more attractive for customers to visit the stores. Next to this, the website shows online users the nearest shop within a radius of 50 km. There are also a lot of trainings for the sales team (Staff, p.15).

Strengths: Store visibility capabilities. Weaknesses: Limited options within increasing brand awareness.

7S CONNECTION (Figure 7) Aligned strategic fit Partly aligned fit Misaligned fit

SHARED VALUES SHARED VALUES STRUCTURE

STRUCTURE

STYLE

STAFF

1 1

SKILLS

SYSTEMS

STYLE

STAFF

SKILLS

SYSTEMS

STRATEGY

7 8

STRATEGY

The connections and gaps that could be found between all 7 elements of the McKinsey method, can be seen in Fig. 7, p. 23. It shows where the company is having a good performance or where it has to improve. 1. When looking at the rigid communication -which the company could have, according to its organizational structure- this is very much standing against the sense of belonging, its value. 2. Miniconf has difficulties at radiating its actions, which means that the company is not working on the basis of its values. Next to this, the company does not reach all aspects of the competitive strategy it stands for. 3. The company has very good relationships but the functional strategy does not reach all aspects. This could be the result of not having a clear communication inside the company but also towards the consumer. 4. When the competitive strategy is not clear enough, this also has to do something with the communication towards each other. This could mean that the different departments do not work according the same plan. 5. Because departments do not work according the same plan (point 4), the managers of different departments do not communicate good enough to see where the gaps appear within the use of the total values.

6. The company shows it does not have a clear view on its own identity. The staff do not always work according its skills. 7. Due to a lack of transparency, the communication to the consumer is not good enough. The company must show where it stands for in a more visible way on the online and offline channels. 8. When looking at skills, there is a lack of communication to the outside world. When then combining this to the strategy â&#x20AC;&#x2DC;increasing brand awarenessâ&#x20AC;&#x2122; this is not even mentioned. To increase this, it is very important for the company to be more transparent in a way that consumers know what the brand stands for.

MARKETING CHANNELS

BUSINESS PARTNERS

Operational

(Figure 7)

Strategic

Ad Hoc

Ongoing

1. Alliance/Monitor > Factories/Producers: Capsule Collection Sarabanda, Made in Italy)

3. Partnership/Join Forces > Factories/Producers > Online retailers > Franchise > Agent > Logistics

2. Transactional/Exploit

4. Co-operative/Automate > Shop-in-shops > Multi-brand stores

Miniconf has different kind of relations within its marketing channels. Those relations are very important for the company. It works strongly together with all of its partners and has a lot of human contacts. (Magni, 2018) There is a relationship matrix used (Fig. 7, p.26) to analyse the different relationships and dependency between Miniconf and its partners. 1 Alliance/Monitor For the specific Capsule Collection of Sarabanda, Miniconf has had an Ad Hoc -but strategically very import partnership. With this, the company can increase the brand awareness and publicity for a short period of time. 3 Partnership/Join Forces The ongoing/strategic partnerships are all long-term and very important to the company. Most of them in terms of brand awareness, attracting customers, internationalization and knowledge. With its suppliers, the company has a minimum of 4-5 years cooperation. (Ripamonti, 2018) Some of the ongoing partnerships need strict requirements and control through dependency, power (sources) and trust. 4 Co-operative/Automate The ongoing/operational partnerships are very important to the company, but there is a difference of frequency. Both are important in terms of brand awareness and attracting customers. Miniconf has quite a lot of control. Strengths: Building on strong relationships, a lot of human contacts. Weaknesses: Less control within the partnership/join forces.

FINANCIAL ANALYSIS

RATIOS Profitability A. In comparison to 2015, Miniconfâ&#x20AC;&#x2122;s profitability increased slightly. Making profit is not its only goal. Because it is a family business, it is as much important for the company to maintain. (Annual report Miniconf, 2016) B. Within a year, the equity weakly increased with 2%. This means that there is more equity within the company -which is not really necessary- considering the fact that it is family business. (Annual report Miniconf, 2016) Benchmark: By comparing the profitability of OVS and Miniconf, the profit of Miniconf is a lot lower. But because it is a family company, making profit is not its only goal. And of course, OVS has a much bigger market share. (Ovscorporate.it, 2018) Solvency A. By looking at the solvency of Miniconf, it only decreased with 1%. This means that the company is not depending on creditors. This results in a positive outcome, because it shows that the revenue is more than the debt. (Annual report Miniconf, 2016) B. This calculation does not make sense for Miniconf because it is not applicable. (Annual report Miniconf, 2016) Benchmark: By comparing the solvency of OVS and Miniconf, both outcomes are good. But the solvency result of Miniconf is much better, which means that its less depending on creditors, compared to its competitor. (Ovscorporate.it, 2018) Liquidity A. By looking at Miniconfâ&#x20AC;&#x2122;s positive numbers of both 2015 and 2016, the company can meet its payment obligations. (Annual report Miniconf, 2016) B. By looking at the current ratio, there can be discovered if Miniconf can meet its shortterm payments. The current ratio is high because the company has a lot of liquidity. To make more profit, it would be better to invest the money. In a healthy company, this number is normally between 1-2. (Nl.wikipedia.org, 2018) C. A healthy outcome would be 1 or higher. By looking at the Acid Test Ratio of Miniconf this is all right. It also has risen, which means that the company can meet all of its payment obligations. (Nl.wikipedia.org, 2018) Benchmark: By comparing the liquidity of OVS and Miniconf, both outcomes are fine. Which means that both companies can meet all of its payment obligations. (Ovscorporate. it, 2018)

Cash Conversions Cycle DSO By looking at the facts about paying invoices in general this is 30 days on average, to pay invoices by clients. (Annual report Miniconf, 2016) This of course all depends on the business and the overall agreements with clients, suppliers, etc. Comparing this to Miniconf, this is too high. In this way, the company is very depending on others. It would be better for the company if the DSO would be less. (Meyer, 2018) DIO/DSI There can be concluded that Miniconf had more difficulties at selling its inventory. The number of days also increased within a year. Considering that Miniconf has two collections a year, the outcome is realistic. Although it would be better if it is a little lower. (Annual report Miniconf, 2016) Benchmark: But by comparing this to OVS (Ovscorporate.it, 2018) and H&M (About. hm.com, 2018), Miniconf did a good job at selling its inventory, while its competitors had more difficulties. DPO Miniconf is on time by paying its bills. Comparing this to the DSO, you can see that the company first pays its bills before it receives its money. It would be better for the company to find good balance between these two. (Annual report Miniconf, 2016) CCC The CCC is very high and could be improved. By looking at the numbers of DIO, DSO and DPO it is not in balance. For example: the amount of days -when the company gets its money back- is higher compared to the amount of days it pays its bills. In this way, it is really depending on creditors. The company should have strict and clear negotiations, which will result in more power and respect.

Strengths: The company is solvent and liquid. Weaknesses: Difficulties at selling inventory, balance between paying/receiving money.

SWOT

(Figure 8)

> High productivity.

> Difficulties at selling the inventory due to slow and non practical production process.

> Strong business relationships due to excellent human contacts.

> The inadequate way of controlling the cash flow, due to a high Cash Conversions Cycle.

> Loyal staff. > Solvent and liquid company.

> Poor brand visibility, online and offline. > Lack of transparancy and communication towards the consumer. > No clear communication between departments due to not rediating on actions.

S O

SW OT

> Sustainability is becoming a more important trend.

> Fast fashion is still rising and therefore the price standard is reducing.

> Dutch households will spent over 8% more on fashion in 2022, which generates a lot of growth within the childrenswear market.

> Consumers have all the power. > Infrastructure between online and offline is becoming more important.

> The total of children between 0-15 years is expected to grow with 1%, in 2022.

> Children can be influenced directly, which makes it important to influence both the parent and child at the same time.

> Economic recovery, which gives consumers the room to start or expand a family.

W T

OT 32

CONCLUSION

By analysing Miniconf as a company, there are several strengths, weaknesses, opportunities and threats identified which have a positive and negative effect on its performance. Internal At first, the company has a lot of difficulties at selling its inventory and monitoring the cash flow. These factors have a connection to the solvency and liquidity of the company, with positive outcomes. By having a poor brand visibility on the online and offline channels, the company will miss opportunities. In terms of communication and transparency, the company fails towards the consumer but also between its departments, due to not radiating on actions. Due to an excellent organizational structure, Miniconfâ&#x20AC;&#x2122;s productivity is very high. Most of the staff can be seen as loyal, because they are active within the company for longer period of time. Because the company is very much focussed on building strong relationships (in the broadest sense), it has good human contacts with most of its partners. External Due to the rapid growth of urbanization and economic recovery, the company can generate growth (8%) within the childrenswear market in The Netherlands. Because Dutch households will spent 8% more on childrenswear fashion. Also the rise of sustainability could put the company in advantage. (de Jong et al., 2018) On the other hand, fast fashion will rise towards 2022 which will reduce price standard. Consumers will have all the power, which makes it important to organize the infrastructure of online and offline channels in a good way. Additionally, children becoming more influential, so both the parent and child must be influenced at the same time. (de Jong et al., 2018)

APPENDIX

Rachelle de Jong / M2B / 2017-18

SOURCES Background Conti, S. (2018). Miniconf :: storia :: azienda :: Da 40 anni abbigliamento per i bambini di ieri, oggi e domani. [online] Miniconf.it. Available at: http://miniconf.it/azienda/storia [Accessed 1 May 2018]. ELITE Company interview. (2018). [video] Italy: ELITE. Available at: https://it.elite-growth. com/en/companies/miniconf-spa [Accessed 1 May 2018]. PagineGialle.it. (2018). Miniconf Spa - Ortignano Raggiolo. [online] Available at: https:// www.paginegialle.it/miniconf [Accessed 26 Mar. 2018]. Conclusion de Jong, R., Mast, D., Falk, E., Boakye, P., Poon, D. and van der Woude, J. (2018). Trendbook. [online] Amsterdam: Rachelle de Jong, pp.3-8. Available at: https://issuu.com/ rachelleshantal/docs/m2b.group3.trendtoforecast [Accessed 2 Apr. 2018]. Executive Summary de Jong, R., Mast, D., Falk, E., Boakye, P., Poon, D. and van der Woude, J. (2018). Trendbook. [online] Amsterdam: Rachelle de Jong, pp.3-8. Available at: https://issuu.com/ rachelleshantal/docs/m2b.group3.trendtoforecast [Accessed 2 Apr. 2018]. Magni, A. (2018). Company visit. PagineGialle.it. (2018). Miniconf Spa - Ortignano Raggiolo. [online] Available at: https:// www.paginegialle.it/miniconf [Accessed 26 Mar. 2018]. Financial Analysis About.hm.com. (2018). Full-year report. [online] Available at: https://about.hm.com/ content/dam/hmgroup/groupsite/documents/masterlanguage/cision/2017/01/1869818.pdf [Accessed 1 May 2018]. Annual report Miniconf. (2016). Miniconf. Meyer, B. (2018). How Long Should You Give Clients To Pay Invoices? | The Free-lance to FreedomÂŽ Project. [online] The Freelance to FreedomÂŽ Project. Available at: http:// freelancetofreedomproject.com/long-give-clients-pay-invoices/ [Accessed 27 Apr. 2018]. Nl.wikipedia.org. (2018). Current ratio. [online] Available at: https://nl.wikipedia.org/wiki/ Current_ratio [Accessed 21 Apr. 2018]. Ovscorporate.it. (2018). Annual report. [online] Available at: http://www.ovscorporate. it/sites/ovs2014/files/documenti/ovs_annual_report_2016_eng_1.pdf [Accessed 1 May 2018].

SOURCES Introduction PagineGialle.it. (2018). Miniconf Spa - Ortignano Raggiolo. [online] Available at: https:// www.paginegialle.it/miniconf [Accessed 26 Mar. 2018]. Marketing Channels Magni, A. (2018). Company visit. Ripamonti, A. (2018). Company visit. Research focus point Bendinelli, S. (2018). Company visit. The McKinsey 7s model Shared values Miniconfapp.com. (2018). Miniconf - Fase 1. [online] Available at: http://www.miniconfapp. com/qr/tag1_eng.html [Accessed 6 Apr. 2018] Skills Conti, S. (2018). Miniconf :: ricerca :: azienda :: Da 40 anni abbigliamento per i bambini di ieri, oggi e domani. [online] Miniconf.it. Available at: http://miniconf.it/azienda/ricerca [Accessed 8 Apr. 2018]. Miniconfapp.com. (2018). Quality control - Phase 3. [online] Available at: http://www. miniconfapp.com/qr/tag3_eng.html [Accessed 2 May 2018]. Patelli, E. (2018). Company visit. Sarabanda.it. (2018). Sarabanda - Shipping Times. [online] Available at: https://www. sarabanda.it/en/delivery-time/ [Accessed 30 Apr. 2018]. Wefers Bettink, Y. (2018). Supply Chain Management. Staff Buyers office Miniconf._PITTI (1).MOV. (2018). [video] Italy: Miniconf. Magni, A. (2018). Company visit. Miniconfapp.com. (2018). Miniconf - Phase 1. [online] Available at: http://www. miniconfapp.com/qr/tag1_4_eng.html [Accessed 20 Apr. 2018]. Strategy Bendinelli, S. (2018). Company visit.

SOURCES Conti, S. (2018). Miniconf :: ricerca :: azienda :: Da 40 anni abbigliamento per i bambini di ieri, oggi e domani. [online] Miniconf.it. Available at: http://miniconf.it/azienda/ricerca [Accessed 8 Apr. 2018]. Magni, A. (2018). Company visit. Miniconfapp.com. (2018). Miniconf - Phase 1. [online] Available at: http://www. miniconfapp.com/qr/tag1_4_eng.html [Accessed 20 Apr. 2018]. Patelli, E. (2018). Company visit. Presentazione EC per export. (2018). Structure Magni, A. (2018). Company visit. Hera, L. (2018). 7S McKinsey Structure. Style Magni, A. (2018). Company visit. Business Culture. (2018). Business meeting etiquette. [online] Available at: http:// businessculture.org/southern-europe/business-culture-in-italy/meeting-etiquette-in-italy/ [Accessed 26 Mar. 2018]. etiquette, B., Italy, D. and Italy, D. (2018). Business Culture and Etiquette in Italy | Today Translations. [online] Todaytranslations.com. Available at: https://www.todaytranslations. com/doing-business-in-italy [Accessed 7 Apr. 2018]. Smit, J. (2018). 7S McKinsey Style. Systems About.hm.com. (2018). Full-year report. [online] Available at: https://about.hm.com/ content/dam/hmgroup/groupsite/documents/masterlanguage/cision/2017/01/1869818.pdf [Accessed 1 May 2018]. Bendinelli, S. (2018). Company visit. Conti, S. (2018). Miniconf :: ricerca :: azienda :: Da 40 anni abbigliamento per i bambini di ieri, oggi e domani. [online] Miniconf.it. Available at: http://miniconf.it/azienda/ricerca [Accessed 8 Apr. 2018]. Magni, A. (2018). Company visit.

SOURCES Miniconfapp.com. (2018). Ferrantina - Phase 7. [online] Available at: http://www. miniconfapp.com/qr/tag7_eng.html [Accessed 16 Apr. 2018]. Ovscorporate.it. (2018). Annual report. [online] Available at: http://www.ovscorporate. it/sites/ovs2014/files/documenti/ovs_annual_report_2016_eng_1.pdf [Accessed 1 May 2018]. Patelli, E. (2018). Company visit. Presentazione EC per export. (2018). Wefers Bettink, Y. (2018). Supply Chain Management.

BALANCE SHEET (Figure 9)

(Figure 10)

INCOME STATEMENT (Figure 11)

7s MODEL -SYSTEMS

FINANCIAL ANALYSIS Return On Capital Employed (ROCE) Profit / capital employed (total assets – total current liabilities) * 100% Miniconf 2015 = 772.248 / (81.370.793-25.401.830) * 100% = 1,4% 2016 = 3.421.374 / (77.008.530-16.742.113) * 100% = 5,7% Change = > Profit: 3.421.374 - 772.248 / 772.248 * 100% = 343,0% > Capital employed: 60.266.417 - 55.968.963 / 55.968.963 * 100% = 7,7% OVS 2015 = 81.100.000 / (1,901,766-501,855) * 100% = 5.793,2% 2016 = 91.800.000 / (1,936,204-485,437) * 100% = 6.327,7% H&M 2015 = 20.898.000/ (18.801-866) * 100% = 11.6520,8% 2016 = 18.636.000 / (18.422-945) * 100% = 106.631,6% Inventory Turnover Cost of goods sold / average inventory (beginning inventory + ending inventory / 2) Miniconf 2015 = 46.001.760 / 24.038.184 = 1,9 2016 = 40.007.502 / 20.410.808 = 2,0 OVS 2015 = 565.000 / 536,973 = 1,1 2016 = 576.800 / 556,625 = 1,0 H&M 2015 = -77,694 / 45,536 = -1,7 2016 = -86,090 / 50,663 = -1,7 DSI Inventory / cost of goods sold * 365 Miniconf 2015 = 20.410.808 / 46.001.760 * 365 = 161,95.. = 162 days 2016 = 24.038.184 / 40.007.502 * 365 = 219,31… = 219 days OVS 2015 = 536,973 / 565.000 * 365 = 346 days 2016 = 556,625 / 576.800 * 365 = 352 days H&M 2015 = 45,536 / -77,694 * 365 = -213 days 2016 = 50,663 / -86,090 * 365 = -215 days

MARKETING CHANNELS

BUSINESS PARTNERS Collect the following data (to be presented in the appendix to the report) Outsourced Business partners: 1 Producers - Factories/producers: Accessories, knitwear, woven, denim, outerwear, shoes, labelling, hangtags, finishing, haberdashery External Business partners: 2 Trade - Shops: Shop-in-shop, online retailers (bol.com/3hartjes.com/puddleduckskids.com/childrensalon. com/etc.), franchise, multi-brand stores - Agent Sales reps (partners that represent the brands) 3 Service Providers - Logistics BRT (DPD in The Netherlands) For each of â&#x20AC;&#x2DC;typeâ&#x20AC;&#x2122; of business partner evaluate ( 0-10 scale) the following: - How strategically important is the relation? / How frequently do you do business with this businesspartner(s)? 1 Producers Factories/producers: (10) It is a very important relation, because without suppliers there is no business. Miniconf has long term relationships with its suppliers, a minimum of 4-5 years cooperation. The company works strongly together and has a lot of human contacts. These relations are very important for the company. 2 Trade Shops: - Shop-in-shop: (8) It is a very important relation, in terms of brand awareness and attracting customers. In addition to the requirements, made by the department store, the company has quite a lot of control. This partnership is per definition long-term. - Online retailers: (9) It is a very important relation, in terms of brand awareness and attracting customers. This partnership is long-term, but with strict requirements. - Franchise: (9) It is a very important relation, in terms of brand awareness. The company hands over the

responsibility to the franchiser, but control is needed. A close relationship is important. It can control this through: dependency, power (sources) and trust. It will also reduce cost. This partnership is per definition long-term. - Multi-brand stores: (8) It is a very important relation, in terms of brand awareness and attracting customers. This partnership is not often but frequently, because the stores only buy twice a year but for a longer period of time. Agent: (9) Sales reps: It is a very important relation, in terms of internationalization and because the sales reps know the market much better. This is important for defining market needs. This partnership is long-term with a continuing process, because of the development of the brand. 3 Service Providers Logistics: (10) BRT (DPD in The Netherlands) It is a very important relation for the whole supply chain process. This partnership is per definition long-term and frequent. A need this for the business. Position the business partner â&#x20AC;&#x2DC;typeâ&#x20AC;&#x2122; accordingly in the governancematrix The marketing Channels (Fig. 7, p.26) shows the governancematrix. Analyze your data and comment on the following: Which relationships would you change and how? Do it yourself or outsource? / Change dependency structure? / Develop/ Use sources of power? Outsourced Business partners: 1 Producers (Factories/producers) Because the capsule collection is a special collection and important for attracting more customers, it could be more frequently (every year). It makes the brand stronger. More do it yourself, use the source of power: reference and identification. 2 Trade (Shops: Online retailers) Because e-commerce is getting bigger, this is important for the brand (especially for sales). There should be more own contribution (dependency) and better/more identification (for the brand ID).

FINANCIAL ANALYSIS

CALCULATIONS Profitability On business level EBIT/Average total assets 2015 = 477.752 / 79.963.083 = 0,00597466 2016 = 1.666.279 / 74.751.871 = 0,02 Equity providers Profit after taxes/average equity 2015 = 477.752 / 52.942.596 = 0,00902396 = 0,01 2016 = 1.666 / 49.059.572 = 0,03 3.1 Solvency Debt ratio Equity/total assets 2015 = 52.942.596 / 81.370.793 = 0,65 2016 = 49.059.572 / 77.008.530 = 0,64 Interest coverage ratio EBIT/interest 2015 = 79.963.083 / 733.265 = 109,05 2016 = 74.751.871 / 1.576.937 = 47,40 3.2 Liquidity Net working capital Equity + long term liabilities – fixed assets 2015 = 52.942.596 + 0 – 19.318.500 = 33.624.096 2016 = 49.059.572 + 6.999.999 – 18.821.716 = 37.237.855 Current ratio Current assets / short term liabilities 2015 = 70.448.718 / 25.401.830 = 2,77 2016 = 66.090.787 / 16.742.113 = 4,11 Acid test ratio Current assets – inventory / short term liabilities 2015 = 70.448.718 – 24.038.184 / 25.401.830 = 1,83 2016 = 66.090.787 – 20.410.808 / 16.742.113 = 2,90 Cash Conversions Cycle DSO = number of days it takes before your client has payed you Account receivables / sales * 365 2015 = 33.316.435 / 79.963.083 * 365 = 152,08.. = 152 days 2016 = 29.689.615 / 74.751.871 * 365 = 144,97.. = 145 days

DIO = days it takes before inventory is sold Inventory / cost of goods sold * 365 2015 = 20.410.808 / 46.001.760 * 365 = 161,95.. = 162 days 2016 = 24.038.184 / 40.007.502 * 365 = 219,31… = 219 days DPO = the days you wait till you pay your bills Account payables / cost of goods sold * 365 2015 = 12.346.577 / 46.001.760 * 365 = 97,96.. = 98 days 2016 = 9.494.732 / 40.007.502 * 365 = 86,62.. = 86 days CCC = 2015: DSO + DIO – DPO = 216 days CCC = 2016: DSO + DIO – DPO = 278 days